Westpac Banking Corp chairman Lindsay Maxsted has pledged to shareholders to continue to fight against the government's controversial bank tax, and urged policy makers to allow the royal commission to restore trust in the banking sector.

At the annual general meeting of the nation's oldest company, Mr Maxsted told the several hundred shareholders gathered in the new International Convention Centre in Sydney on Friday morning the government's $6 billion bank levy is "not in Australia's best interests".

"We will continue to work on your behalf for the removal of this highly inefficient and distortive tax," he said.

With Westpac holding its final 2017 dividend flat at 94 cents per share, Mr Maxsted said the tax had cost it $66 million, or 2 cents per share, in 2017 and this will rise to $284 million in 2018, or 8 cents per share.

That compares to annual cash earnings of $8.06 billion, which was up 3 per cent, in the 2017 year.

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The chairman said "no decision on how to deal with the levy has been made in the period ahead" but in 2017, "the bank did not pass the bank levy onto customers, suppliers, or our employees and so it directly reduced our profit and retained earnings".

"It still had a real impact on your company and on shareholder returns."

The government surprised the banking industry in the federal budget in May with a $1.5 billion-a-year levy that is being imposed on the big four banks and Macquarie, on top of their normal corporate tax rates.

Mr Maxsted said it was hitting the banks in a tougher environment for revenue growth, with the Australian Prudential Regulation Authority's lending controls and tighter lending standards to lead to slower growth in lending and deposits in 2018, he said.

He also addressed the government's royal commission and said it must work to restore the sector's battered reputation.

"The deterioration in the sector's reputation has been a great disappointment to me personally and the board," he told the meeting.

"It is our hope that, ultimately, the newly announced royal commission will play a role in restoring trust, respect and confidence in Australia's already strong financial system," he said.

'Line in the sand'

Westpac CEO Brian Hartzer told shareholders the bank was "embracing the royal commission as a way to finally draw a line in the sand on calls for inquiries".

Westpac would use it as "an opportunity to tell our story, including the success of Australia's banking system in navigating the GFC and providing vital support for Australia's robust economy today," he added.

"While the inquiry may find issues across the industry, what I hope it will also show, is that in Westpac's case, we are acting to fix past issues as they arise and are continuing to invest in the quality of service that we deliver to customers."

New directors Alison Deans and and Nerida Caesar are seeking election at the meeting, while Robert Elstone is retiring. Mr Maxsted said Westpac intended to appoint "one or two" additional non executive directors in 2018.